Be Sure To Check Out Fortior Technology (Shenzhen) Co., Ltd. (SHSE:688279) Before It Goes Ex-Dividend

It looks like Fortior Technology (Shenzhen) Co., Ltd. (SHSE:688279) is about to go ex-dividend in the next 3 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. Accordingly, Fortior Technology (Shenzhen) investors that purchase the stock on or after the 24th of June will not receive the dividend, which will be paid on the 24th of June.

The company's upcoming dividend is CN¥0.61 a share, following on from the last 12 months, when the company distributed a total of CN¥0.61 per share to shareholders. Based on the last year's worth of payments, Fortior Technology (Shenzhen) stock has a trailing yield of around 0.5% on the current share price of CN¥117.98. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Fortior Technology (Shenzhen) can afford its dividend, and if the dividend could grow.

View our latest analysis for Fortior Technology (Shenzhen)

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Fortunately Fortior Technology (Shenzhen)'s payout ratio is modest, at just 30% of profit. A useful secondary check can be to evaluate whether Fortior Technology (Shenzhen) generated enough free cash flow to afford its dividend. It distributed 40% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Fortior Technology (Shenzhen)'s dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see Fortior Technology (Shenzhen) has grown its earnings rapidly, up 21% a year for the past five years. Earnings per share have been growing very quickly, and the company is paying out a relatively low percentage of its profit and cash flow. Companies with growing earnings and low payout ratios are often the best long-term dividend stocks, as the company can both grow its earnings and increase the percentage of earnings that it pays out, essentially multiplying the dividend.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. In the past two years, Fortior Technology (Shenzhen) has increased its dividend at approximately 18% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

Final Takeaway

Is Fortior Technology (Shenzhen) an attractive dividend stock, or better left on the shelf? Fortior Technology (Shenzhen) has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Fortior Technology (Shenzhen) looks solid on this analysis overall, and we'd definitely consider investigating it more closely.

Curious what other investors think of Fortior Technology (Shenzhen)? See what analysts are forecasting, with this visualisation of its historical and future estimated earnings and cash flow.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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